The relative value of condo hotel units in one of Alberta's top resort towns will continue to fall without regulatory changes, says the CEO of a prominent management company.
Ed Romanowski of Bellstar Hotels & Resorts says condo hotel units in Canmore are now selling for about $100 to $150 less per square foot than similar residential units in town.
Romanowski isn't exactly crying wolf. The average price per square foot of two condo hotel units that sold in Canmore in September was only $187, versus an average per-square-foot price of $307 for 11 Canmore apartments sold in the same month, according to local realtor Richard Greaves.
Assessor Frank Watson of Bow Valley Property Valuators notes the value gap is widening between condo hotel units and residential/tourist home units in various complexes in the community.
Watson said the assessed-value gap between similar units with different uses is in the 25 to 35 per cent range for the 2012 property tax year, but he expects that to change for 2013, based on recent sales.
"It will definitely be more than 35 per cent," he said. "On the visitor accommodation, those values still appear to be going down."
Access to financing for the units is a big issue, and Romanowski says a proposed area-redevelopment plan (ARP) for the Bow Valley Trail district will do little to change that.
He added that the proposed ARP, which discourages conversion of existing vacation accommodation units to residential units, won't help condo hotel values because banks simply don't want to finance units that don't allow for permanent occupancy.
Romanowski also believes the Town of Canmore should be allowing conversion of the units to ones that don't restrict occupancy to 28 consecutive days.
"There's almost no financing available for them," he said, adding that conversions to residential units should be encouraged and that the high cost of keeping condo hotel suites in rentable condition adds to the overall cost.
Bellstar currently manages about 450 units in Canmore in a wide range of properties and also owns about 60 units in Solara Resort and Spa, a condo hotel project the company helped rescue from receivership when the boom went bust in the mountain paradise.
from Western Investor December 2012
